As I often get readers coming to the blog searching for historical charts of Sacramento home prices, I thought I'd throw this one up. Click on the chart for a better view. The chart shows median home prices in Sacramento County (and West Sacramento) since 1987 and is based on data from the Sacramento Association of Realtors. Also included on the graph are some key indicators such as inventory, affordability, employment, and foreclosures.
From the Sacramento Bee:
If you're seeking ground zero of the real estate collapse, go no farther than Laguna Ridge. Four years ago, this 1,900-acre swath – characterized as Elk Grove's "crown jewel" – was master-planned for 7,767 homes. Roads, utilities, parks, and a new high school are all in place. But the downturn hit so hard and so fast that only 310 houses have been sold so far. Thousands of phantom houses lend a surreal air to Laguna Ridge, a vast quadrant of the busy intersection of Elk Grove Boulevard and Bruceville Road.From Bloomberg:
...
"It breaks my heart," said Kathryn Boyce, a Northern California real estate analyst for Hanley Wood Market Intelligence. "Laguna Ridge would be perfect – a shining star. But the market crashed so quickly and deeply that it didn't happen." Still, Boyce is a believer in real estate cycles..."The housing market will come back with a roar. At Laguna Ridge, all the infrastructure is in place and you'll see a ton of houses all opening at once. It's poised to come back like wildfire."
So check back in a couple years. Laguna Ridge may be ground zero of the great real estate explosion of 2010.
From TheStreet.com:California led the U.S. into the worst housing recession since the 1930s. Now the most populous state may be the first to find the bottom. In Stockton, the U.S. metro area with the highest foreclosure rate, home sales more than doubled in the second quarter after prices fell by an average 37 percent, said PMZ Real Estate Corp., the area's largest broker...Foreclosed homes are now getting multiple bids and the supply of homes for sale in San Joaquin and Stanislaus counties shrank to 4.9 months in June from 18.2 months a year earlier, he [PMZ's Michael Zagaris] said. "We've found the bottom,'' Zagaris said.
...
It may take until 2010 for foreclosure sales to work their way out of the system in areas where defaults have soared, said [Chris] Thornberg of Beacon Economics. "Those sales are going to have a very large impact on prices for the next year or so until those homes get absorbed by the market," he said. "Housing markets don't bounce, they splat. They hit bottom and they stay there."
Jim CramerFrom the Stockton Record:
Cheap Housing Markets Will Sow the Seeds of a Rebound
Home prices in Stockton, CA are down 40%. In Daytona, FL, houses are priced at 30% discounts with amenities. The Inland Empire of California -- you name your price. That's how the madness ends: with huge price cuts....It is all coming together, just when no one sees it coming. Because you have to look at the hard-hit regions to know what's going on.
The union representing the Stockton Police Department's rank and file has filed a claim against the city, saying a 9.5 percent raise budgeted by the city is not enough under the terms of a 2005 agreement.From the Sacramento Bee:
...
The pay increase the police union says it is owed could trouble a city budget already beleaguered by the collapse of the housing market and the inability of flattening sales and property tax revenue to offset rising costs.
Gov. Arnold Schwarzenegger signed an executive order today eliminating jobs for as many as 22,000 temporary state employees and reducing pay for about 200,000 state workers to the federal minimum wage of $6.55 per hour, portraying it as a stopgap measure to ensure the state can pay its bills without a state budget.
The Republican governor intends to reverse those moves once lawmakers reach a budget compromise, meaning the state would rehire temporary workers and give employees their entire back pay. The governor's order also imposes a strict hiring freeze and eliminates overtime but exempts workers in health and safety fields.
From the Stockton Record:
Stockton area real estate brokers say that at least 80 percent of home sales this year are foreclosure homes and that as much as half of those sales involve investors. According to figures from Coldwell Banker Grupe-TrendGraphix monthly sales reports, based on Multiple Listing Service data, there have been more than 3,600 closed sales on single-family homes in San Joaquin County. If eight out of 10 of these are foreclosure properties, that means about 2,900 foreclosure sales, with perhaps up to 1,450 of those bought by investors and headed for the rental market.From the Sacramento Business Journal:
Financial Title Co., headquartered in Citrus Heights, abruptly closed its 57 branches in California late Wednesday, as well as shuttering operations in Arizona and Texas, the California Department of Insurance said. The company has 10 offices in the Sacramento market.From the Sacramento Bee:
Mortgage brokers said Monday the FHA program, in which the federal government's guarantees make loans more affordable, accounts for the vast majority of their business. That's become increasingly true as credit markets tighten and conventional mortgage guidelines become more restrictive. Some experts said the FHA's guarantees are playing a major role in the fledgling recovery in Sacramento's real estate market.From Calculated Risk:
...
With conventional lenders demanding down payments of 5 percent or 10 percent, the 3 percent down payment required by FHA has become a bargain. That could make the FHA "the new lender that's going to deal with risky loans," said Steven Krohn, an economist and analyst with the Real Estate Group Inc., a consulting firm in Sacramento. "They've moved in to kind of remove the financing risk from the banks and the investors."
In a number of previous housing busts, real prices declined for 5 to 7 years before finally hitting bottom. That is my expectation for the duration of the price declines in the bubble areas. The bottom for real prices will probably be in the 2010 to 2012 period. The less bubbly areas will probably bottom sooner. If this bust follows the historical pattern, we will continue to see real price declines for several more years, and the rate of decline will probably slow....
From the BBC News:
Professor Nouriel Roubini of New York University, one of the first economists to warn of the dangers of the American house price boom, believes the number of people positively choosing to walk away is growing rapidly. "This is becoming a tsunami of voluntary defaults," Professor Roubini says.From the Stockton Record:
...
In the city of Stockton - the foreclosure, or repossession, capital of the US for 2007 - estate agent Kevin Morgan sells repossessed houses on behalf of the banks that now own them. According to him, walking away has become commonplace. "I would say it's probably 70% of the volume of our foreclosures right now," he says.
A north Stockton Linens 'n Things store is among 57 stores that will be closing in the next several months nationally as the home furnishings and bedding retailer continues through bankruptcy reorganization.From the Modesto Bee:
...
Steve Carrigan, economic development director for Stockton, said Linens 'n Things is a victim of the economy but that there have been relatively few retail closings in Stockton. "This probably isn't the end, but hopefully, we're getting near the end of this bad-news cycle," he said. "In that sense, we've been very fortunate. We've just about weathered the storm."
President Bush is expected to sign housing bailout legislation this week that could give Northern San Joaquin Valley agencies perhaps $120 million to buy foreclosed homes. Details of how the $4 billion federal program would work are sketchy, but local real estate experts predict that the new government venture could do more harm than good.From the Manteca Bulletin:
...
"It's a joke. It won't even make a dent," [ForeclosureRadar's Sean] O'Toole said. "It's a complete government boondoggle." During the past year, O'Toole said lenders foreclosed on nearly $6.8 billion worth of home loans in San Joaquin, Stanislaus and Merced counties. So giving local government $120 million to buy those homes "is meaningless."
Modesto real estate leaders don't see much merit in the plan, either. "It's not going to help solve any problems at all," said Mike Zagaris, president of PMZ Real Estate. "It's an act by politicians who are trying to get re-elected. It has little to do with helping people and will only, in the end, contribute to our national budget deficit."
Manteca - and every other community in a similar situation - should be jumping up and down about $3.9 billion in outright federal grants to cities hardest hit by the foreclosure mess to allow them to buy foreclosed homes and rehabilitate them to help create affordable housing, right? Guess again.From Minyanville:
...
There are so many things wrong with this as to why it won't work that you don't need to interject philosophy of what government should and shouldn't do into the debate.
According to the Journal, metro areas like Sacramento, California, Denver, San Diego and Las Vegas actually reported a decline in housing inventory from a year earlier. Supply is still well above historical averages but, the report argues, if this trend continues it could usher in the end to the real estate slump.
...
Meanwhile, back in a world still loosely based on reality, easing inventory is a result of changing market dynamics, not an imminent bottom. First, in troubled areas like California’s Central Valley and Inland Empire, (east of Los Angeles) Phoenix and Las Vegas, foreclosure and other distressed sales account for almost half the total transactions. As vulture funds and other investors swoop in to purchase delinquent mortgages and abandoned houses, such opportunistic buying has reduced inventory. Small boutique investment firms, big hedge funds and Investment banks...are driving these markets. Some are buying foreclosed homes en masse, while others are snapping up delinquent mortgage at a deep discount. As the new owner of the loan tries to sort things out with the borrower, homes previously for sale come off the market.
The majority of these properties, however, will just end up for sale again: Almost half the delinquent mortgages traded in this market ultimately end up in foreclosure. Investment banks and hedge funds aren’t in the business of owning portfolios of residential real estate, so in a few months they’ll start punting homes at further discounted prices.
The Sacramento Bee interviews Doug Pautsch, former Sacramento division president of Centex Homes (2006-2008). On the past:
Q: Sacramento was one of the first U.S. housing markets to fall apart. Was it a problem communicating that to headquarters?On the present & future:A: The first nine months everyone was in denial: "That's just a little cold that Sacramento has, just a little speed bump. We'll get through it. It's just Sacramento."
They didn't realize it was a flu that would become an epidemic. My local counterparts and I would talk about it. At their respective corporate offices, not just mine, people just didn't understand. Across the country everyone was full speed ahead. Money was flowing and sales were happening. It must just be Sacramento because it went up so quickly.
It was six to nine months before people realized this wasn't just a Sacramento issue. They'd say maybe it was just California or Florida, and maybe it was just Northern California. There was a lot of denial going on. But as we know, everybody caught the flu.
Related Centex posts:Q: Where is this market going?
A: I think we're at the bottom. We're going to bounce around a little bit...I think it will be next year when we start to see recovery. I define that as prices starting to go up.
From the Sacramento Bee:
In most homeowners associations, financial pressures are a concern, not a crisis, managers and officers said. But as they look ahead to next year's spending plans, they worry more about what might happen, rather than what has occurred.From the Sacramento Business Journal:
No area associations are bankrupt. Most haven't raised dues significantly or levied special one-time assessments. But the region's HOA industry chiefs said they're watching the books. Many are planning for worse as the economy weakens, and the housing turmoil shows no signs of slackening.
...
[Dan] Kocal, the Folsom management group owner, declined to talk about which associations are troubled by delinquent assessments. He said one in Sacramento has a 25 percent delinquency rate.
Fewer homeowners are dipping into their pocketbooks to pay for a dip in a new pool. "The leads are off probably 40 percent to 50 percent since last year, and closing leads are off even more. And last year was down from the year before," said Mike Geremia, president of Geremia Pools Inc. in Sacramento. Even companies reporting relatively good numbers say business is off more than 20 percent.From the Modesto Bee:
...
Pool builders aren’t expecting the downturn to end this year. People want to buy [Gregg] Whitley [of Aqua Pool & Spa Inc.] said, but still aren’t feeling enough optimism to commit to the decision. All eyes now are on 2009. Until then? "Well, we pray a lot," [Andrew] Fine [of Blue Haven Pools & Spas] said.
You've heard this before, but this time it's probably true: This is a great time to buy a house in the Northern San Joaquin Valley.From The Guardian:
Yes, people said that last summer, too, and home prices have plummeted more than 40 percent since then. Ouch.
But that only makes homes a steal-of-a-deal now.
It is easy to spot a repossessed home in Stockton, the sub-prime mortgage capital of the United States and, indeed, of the world. You just need to look at the colour of the grass.
...
One of many developments thrown up as people moved east from San Francisco in search of cheaper housing, Creekside consists of endless streets of identical whitewashed bungalows with two-vehicle garages. A typical three-bedroom house here cost about $375,000 (£200,000) two years ago but can now be bought for $125,000.
...
"The biggest danger is that these neighbourhoods will get overrun by drugs and gangs," says [Fred] Sheil [a local housing activist], who says falling prices are attracting slum landlords who snap up houses for a song. "They buy properties, they don't maintain them and they rent them out. The cancer just spreads and spreads."
From the Sacramento Business Journal:
In the Sacramento region, the median price [per the California Association of Realtors] was $220,630 in June, compared to $351,620 a year ago, a reduction of 37.3 percent. Sales were up 95.5 percent year over year.From CNNMoney:
California's Central Valley remains ground zero for foreclosure filings. Stockton, which is just east of San Francisco, had the highest rate of foreclosure filings of any metro area [in the second quarter], one for every 25 homes. That's seven times the national average. Riverside/San Bernardino, which is east of Los Angeles, had the second highest rate in the nation with one filing for every 32 households. Las Vegas, Bakersfield and Sacramento rounded out the top five.From the Stockton Record:
Repossessions alone are up more than eightfold in San Joaquin County in the first half of this year, compared with the same period last year, RealtyTrac reported. A total of 5,643 were repossessed in the first half of this year, up from 683 in the first six months of last year.From the Stockton Record:
The bank has foreclosed on the owners of Stockton's Sheraton Hotel, preventing Regent Hotel LLC from scoring the big success it sought on Stockton's waterfront.From the California Aggie:
...
Regent's venture also was sabotaged by the collapse of the housing market. None of the 42 condos atop the hotel, priced as much as $750,000 [and originally as high as $1.2 million], has sold. Eight buyers put down payments on condos, but the luxury units remain as yet unfinished. Another consequence of Regent's cash flow problems.
Sue Greenwald expressed her disapproval of the additional growth and questioned the logic behind building these new sites during a time of declining housing prices. Greenwald cited data from the Sacramento Bee showing that between the first quarter of 2006 and the first quarter of 2008, Davis has seen a 26 percent decrease in home prices. She also pointed out that Bay Area home prices fell 27 percent in the last year. "That's pretty dramatic," she said. "These are areas just like Davis that are considered higher end and immune to decrease."From the Sacramento Bee:
In Sacramento, Coldwell Banker real estate agent Viki Benbow...telling clients, "There's a much higher probability that interest rates will climb rather than go down." Benbow said this is why people shouldn't wait. But it's hard to tell. Others preach that higher rates will drive prices lower.From the Sacramento Bee:
For all its efforts to become a technology center with a fully diversified economy, Sacramento remains a government town. Gov. Arnold Schwarzenegger's plan to reduce most state employees to minimum wage on Monday will make that painfully clear. State employees – all 112,500 of them in Sacramento, including education workers – account for 11 percent of the area's work force. Schwarzenegger's plan could remove $15 million each workday from the area economy, said Jim Zamora, a spokesman for Local 1000 of the Service Employees International Union.From the Sacramento Bee:
...
"Government jobs are considered steady paychecks – dependable, right? This could shake that somewhat," [UOP's Jeff] Michael said. That could translate into reduced spending at restaurants, clothing stores and the like, putting even more downward pressure on the region's troubled economy.
Overall, though, Sacramento housing-market officials liked the bill, including the provision that would allow at least 400,000 families nationwide to refinance their subprime mortgages with FHA programs. "It will help a segment of people, it is positive, it is a good thing for people who are struggling," said Pam Canada, executive director at the Sacramento office of Neighborworks Homeownership Center, a nonprofit group that assists troubled borrowers.From Wachovia's Q2 2008 Earnings Call (via Seeking Alpha):
But John Arvanitis, president of Sunrise Vista Mortgage Corp. in Citrus Heights, said the provision won't help many who owe more than their homes are worth. "It's the proverbial rubber bone to the starving dog," he said.
...[T]he Central Valley and Inland Empire have both represented our biggest challenges, and actually have represented a little under 50% of all losses we've taken to date and that's where we are focusing on, much of our retention and activity.From WAMU's Q2 2008 Earnings Call (via Seeking Alpha):
MSAs in the southeastern US such as those in Florida and Georgia and MSAs in the inland empire and central valley of California have recently experienced some of the worse housing market conditions and price declines in the country. While these MSAs make up only 20% of our option ARM exposure, they have contributed 39% of our total option ARM delinquency growth for the year.From the Sacramento Bee:
Citing false advertising and other violations, the state of Washington has moved to revoke the business license of Roseville-based Paramount Equity Mortgage Inc.From the Long Beach Press-Tribune:
...
The documents name Hayden D. "Hayes" Barnard as president, co-founder and one-third owner of Paramount, and other company officials. Barnard's voice was frequently heard on Sacramento-area radio stations, touting Paramount Equity Mortgages.
The broker who bought Rep. Laura Richardson's Sacramento house at a foreclosure auction two months ago has dropped his lawsuit against her and her bank, allowing Richardson to reclaim the home. In a statement, Richardson's lender, Washington Mutual, said the litigation had been "resolved," but that the terms are confidential.From the Long Beach Press-Tribune:
The broker, James York, also declined to discuss the matter. "I'm not supposed to say anything," he said. "I think you guys can figure out what happened. I only make business decisions and nothing else."
Rep. Laura Richardson, D-Long Beach, joined the House majority this week in voting for the American Housing Rescue and Foreclosure Prevention Act.
Post off-topic links, observations, and stories about the Sacramento real estate market here. Please read the comment policy before posting.
From Sacramento Bee (updated):
Foreclosures again climbed sharply in the capital region during April, May and June as 6,075 more households surrendered their keys to the banks, property researcher DataQuick Information Systems reported today. But DataQuick's numbers show that the rate of growth foreclosure activity in Amador, El Dorado, Placer, Nevada, Placer, Sacramento, Sutter, Yuba and Yolo counties declined during the quarter from previous levels...DataQuick analyst Andrew LePage said it's unclear if the slowing growth rate indicates a plateau or the inability of overwhelmed banks to process the foreclosures.Sacramento County foreclosures in the second quarter were six times as numerous as the record reached during the 1990s housing bust.
...
Sacramento County accounted for 73.6 percent of foreclosures in the region with 4,475 [up 169% year-over-year].
Last quarter's default numbers were a record in almost all of the state's 58 counties. That included Los Angeles County, where last quarter's 21,632 residential defaults surpassed the prior record of 21,444 recorded during first-quarter 1996...Foreclosure resales have emerged as a significant market factor, accounting for 40.0 percent of all California resale activity last quarter. A year ago it was 5.4 percent.Sacramento County defaults totaled 7,325 in the second quarter, up 91% from a year ago.
...
Of the homeowners in default, an estimated 22 percent emerge from the foreclosure process by bringing their payments current, refinancing, or selling the home and paying off what they owe. A year ago it was about 52 percent.
Phoenix appears to be joining the ranks of other weak markets, such as Las Vegas, Sacramento and Fort Myers, Fla., where distressed sales are creating “mini sales booms” compared to last year when sale activity was all but dead. One gray cloud on the horizon, though: “Growing anecdotal evidence that most of the distressed properties are not being sold to true owner-occupants, but rather to new groups of investors/speculators looking to develop rental portfolios or otherwise flip the homes after a short holding period,’’ the Raymond James analysts point out in their report.From the Sacramento Bee:
A signature Sacramento program that has helped almost 300,000 lower-income people nationally buy homes in the past decade – while stirring controversy for years – is likely to be shut down this week, Nehemiah Corp. of America officials acknowledged Monday. The nonprofit giant believes Congress and President Bush will ban its decade-old down-payment assistance "gift" program within days as part of a larger housing bill, Nehemiah President and Chief Executive Officer Scott Syphax said Monday.From the Sacramento Business Journal:
...
Others say ending the program will harm prospects for a recovery in the housing market. "It takes a major player out of our market," said Jon Kaempfer, senior loan consultant at Sacramento-based Vitek Mortgage.
Sacramento County’s property tax revenue increased a modest 1.9 percent in 2008-09, evidence of declining home values and fewer sales...It’s a dramatic drop after 9.4 percent and 15 percent gains during the previous two years, respectively.
From the Sacramento Bee:
Government jobs declined during the month, particularly in Sacramento. Though the number of state jobs often dips in the summer, the loss of 1,900 state jobs in June helped drive Sacramento-area unemployment to 6.8 percent, an increase of four-tenths of a point. Unemployment in the region...is at its highest since March 1996.From the Sacramento Business Journal:
Other sectors continued to struggle in June, but the decline in state jobs was particularly troubling for the capital. For the past year or so, state hiring had been one of Sacramento's most reliable job sources, acting as an economic cushion while the private sector faltered. "Government was holding us up there," said Howard Roth, chief economist at the state Department of Finance.
...
In the Sacramento area, payrolls shrank by 100 during the month and have dropped 7,100, or 0.8 percent, since last year.
Personal bankruptcies increased 88 percent in the Sacramento region in the first half of the year, and few debtors are showing up in court to plead for their houses. Most owe more than their home is worth and have nothing to argue about. This means large numbers of uncontested bankruptcies are packing court calendars. Business bankruptcies are up 50 percent from a year ago; total bankruptcies are up 68.5 percent.From the SF Chronicle:
...
[Attorney] David Meegan has had to turn down most of the referrals that come his way. "I’ve been doing this for more than 20 years, and I’ve never had as many phone calls as I’ve had since the first of the year," Meegan said.
Apartment rents in the western United States are barely climbing — good news for renters but actually a sign of a weakening economy, according to a new report released Thursday..."Basically the rental market is reflecting the economy," [Caroline] Latham [CEO of RealFacts] said. "For many people, there's a misperception that as home foreclosures go up, there is increased demand for rentals and a rise in apartment costs. We don't see that correlation. It's all the housing market and when there's a weak economy, all of it suffers."...Often, people who lose their houses to foreclosures do not end up renting an apartment; rather, they move in with relatives, Latham said.From the Sacramento Bee:
Sacramento remains one of the state's best markets for renters, with average apartment rents up just 1.7 percent the past year, a new national survey shows. The region's secret? It still has an excess of housing after overbuilding during the boom, analysts said Friday.From the Sacramento Bee:
...
Apartment owners face new competition from investors snapping up more foreclosed homes and renting them out, said Cory Koehler, deputy director of the Rental Housing Association of the Sacramento Valley.
Times have changed – definitely, for the worse – for more than half the lenders who dominated the Sacramento-area mortgage market during the excesses of the housing boom. Some are gone, ruined by loans made here and elsewhere that turned bad. Some are on the ropes.From the Sacramento Bee:
...
The entire U.S. mortgage market seemed to be sliding off a cliff with the troubles of government-backed mortgage giants Freddie Mac and Fannie Mae. Local mortgage brokers admitted to being scared. They warned that if either collapsed, the housing economy would follow.
Anything might happen. But this is starting to look real. For the third straight month, capital-area home sales climbed above figures for the same time last year, a welcome indicator in a region searching for the bottom of its long housing slump. But median prices continued to slide...June's median price of $214,000 for resale homes in Sacramento County is the lowest since $210,000 in February 2003. Median prices for new and existing homes combined slipped to $220,000 in the county. That level was last seen in August 2002.June 2008 homes sales by county
...
Though the sales uptick is encouraging, any rebound so far remains fragile, said DataQuick analyst Andrew LePage. He said much depends on the economy, rising foreclosure rates and conditions in credit markets.
Sales of existing homes - primarily foreclosures still - continued to climb in June in San Joaquin County for the fifth consecutive month while the median sales price slipped to the lowest level since spring 2002...The median sales price countywide fell from $235,000 in May to $220,000 last month....From the Modesto Bee:
...
Jerry Abbott, president and co-owner of Coldwell Banker Grupe in Stockton, said that because of foreclosures, prices have declined 41 percent in the previous year after a 36 percent drop the 12 months before that, and that's good news for many people who couldn't afford to buy a home before the downturn. "We needed a correction in the market," he said. "The foreclosures - even as painful as they are - are part of a correction that has to occur."
Stanislaus County's median fell to $201,000 last month, down 6.5 percent from May and 41.4 percent from June 2007, DataQuick Information Systems reported Friday. The last time the figure was around $200,000 was in mid-2002, three years into a steep run-up that would peak in 2005...In Merced County, the median price slipped to $160,000 last month, 44.8 percent less than a year earlier...San Joaquin County's median was at $227,000 last month, down 42.8 percent from June 2007.From the Modesto Bee:
Indalex Inc., which makes aluminum parts for windows, doors and storefronts, laid off 154 workers in the past year. Just a year after announcing plans to expand its plant and make Modesto the center of its operation for Northern California, company officials blamed the closure on a weak construction market.
From the Sacramento Bee:
Citing a stagnant housing market, Placer County announced today that it will lay off eight employees in its building department. In addition, other employees in the department will be asked to consider filling different jobs at lower salaries.From the Sacramento Bee:
Local car dealerships are closing, new-vehicle sales are down, gas prices remain high and a credit crunch is squeezing both auto dealers and consumers...First-quarter sales of 26,975 vehicles in the Central Valley are down 23.2 percent compared with the first three months of 2007.
...
[T]he trade-in aspect of the business is likely more alarming to customers looking to downsize their vehicles and gas bills. "Some trucks and SUVs are going for 50 percent of the Kelley Blue Book wholesale value," [Peter] Welch [president and chief executive of the Sacramento-based California New Car Dealers Association] said. "Consumers are not getting the expected value on a trade-in, and even without it, they're finding negative equity."
From the Sacramento Business Journal:
[Leslie] Appleton-Young’s job includes overseeing the association’s analysis of the statewide housing market and industry trends. Realtors want to know what’s ahead, so sometimes she has to make predictions. Usually, she’s right. [LOL!] Sometimes, she’s not.Jim Wasserman has the latest TrendGraphix figures. The SAR numbers for June are available here.
Last fall, she estimated that median home prices in California would drop 4 percent in 2008. Recently, she revised her estimate to 8 percent to 10 percent. [The median has dropped 19.1% since December.]
...
[Appleton-Young:] What jumped out at me, in looking at the statistics, was that the percentage of first-time buyers was low, 26 percent of all home buyers. That’s the lowest number since 1979, and it’s a testament to the affordability hurdles that first-timers face.
The bailout of mortgage firms Freddie Mac and Fannie Mae will help stabilize the wobbly recovery in Sacramento's real estate market, analysts said Monday. But the collapse of big mortgage lender IndyMac Bancorp Inc. last week continued to shake Wall Street, depressing the prices of other bank stocks, and showed that many perils remain.From the Sacramento Business Journal:
“The government sector seems to be strong when we need it to be and the private sector is strong when it needs to be,” said Bob Burris, deputy director at the Sacramento Area Commerce and Trade Organization. “It’s kind of a hedge in difficult times.”From the Sacramento Business Journal:
...
Nobody is discounting the concern about 10 percent across-the-board cuts in state government, but there appears to be consensus that actual job losses will not be significant. “Our thought is the state employee reduction will largely be absorbed through elimination of vacant positions or retirements,” said Michael Cohen, director of state administration for the Legislative Analyst’s Office.
Steven Cochrane: Prices peaked in late ’05, though the plunge really started about a year ago. The trouble is there’s no end in sight yet. It’s going to get worse before it gets better.From the Appeal Democrat:
...
I’m fairly certain when the budget is passed, we will start to see some cutbacks in state employment. Sacramento will be the hardest hit — Sacramento and any other area that has a high concentration of state government.
...
Suzanne O’Keefe: The market is maybe reaching a bottom.
...
Sanjay Varshney: The foreclosure rates are still high. Yes, there are a lot of foreclosures that have been picked up by buyers, but that certainly hasn’t had an impact on declining values of existing homes.
...
Sacramento is much more vulnerable. The reason is that Sacramento does not have the paychecks to support the housing market that evolved in the last five years...Really, we need to go back to ... when a good 3,000-square-foot home was only $250,000.
Patti Clary, director of YouthBuild for the Yuba County Office of Education, said the $165,000 three-bedroom, two-bath house on Pine Street — on the market for a year — would have been snapped up during the boom days of California home-buying. "These were a real deal," Clary said. "Now they're not."From the Sacramento Bee:
The YouthBuild houses still represent a good buy, excellent construction and a program that provides 18-to-24- year-olds training in building and other skills, said board of education President Sidney Muck..."The question still looms whether it's overpriced," [Mercy Housing vice president Greg] Sparks said. "I don't think that they're way out there."
A number of small school districts in the foothills of Placer County are considering a merger to combat years of dwindling enrollment and shrinking funds from the state....Placer Union High School District initiated a preliminary study of district reorganization by the Placer County Office of Education to see how merging school districts would improve the schools' financing.From the Stockton Record:
...
The additional cash flow might entice districts hit hard by a struggling housing market, an older population and fewer students to keep schools open.
The dramatic decrease in this area's population growth may be some of the best news possible for our cities. Census Bureau figures released last week show that from 2000 to 2007, Stockton's population grew roughly 17 percent, to 287,245. That makes Stockton the 62nd-largest U.S. city.From the Modesto Bee:
But much more interesting, perhaps, is that population growth slowed considerably starting in 2005, coinciding with the start of the real estate market meltdown. The collapse of the overheated housing market throughout California, but especially in San Joaquin County, with its proximity to the Bay Area, means this area has grown increasingly less attractive to Bay Area residents looking to escape stratospheric housing prices.
When Joe Melendrez bought his home in Bridle Ridge, a master-planned community on Oakdale's southwest edge, the promise of a park and friendly neighbors were crucial. "I assumed I'd look out the window to a park and could cross the street to visit my neighbors," he said. "I'm still waiting for both."LA Land: Waiting in line: That was then... This is now.
Rather than a lush park, with kids playing and families enjoying picnics, Melendrez looks out over a field of knee-high dead weeds and construction debris..."Promises, promises, promises" Melendrez said. "The only activity around here is when they dump more concrete in the field that was supposed to be a park."
...
At least two builders in Bridle Ridge declared bankruptcy, city manager Steve Hallam said....
From the Sacramento Bee:
In a survey released today, the Folsom-based Gregory Group says new home builders sold 1,482 homes during the second quarter of the year in El Dorado, Placer, Sacramento, Sutter, Yolo and Yuba counties. That compared with 1,304 in January, February and March. [Sales are down 17.7% YoY.]From the Sacramento Bee:
...
The newest sales count – 2,786 during the first half of 2008 – puts the region on track to finish well behind last year's count of 7,407. [Gregory Group's forecast for 2008 is 7,710]
...
Average home prices continued to fall in April, May and June, dropping below $400,000 for the first time since late 2003. Average second-quarter values of $394,000 are a 4 1/2-year low....
When Carol Wallace sold her Sun City Roseville home two years ago, she got an expensive reminder from her lender. She owed $5,964. Why? She had paid off her adjustable-rate mortgage early. The lender offered to waive it, Wallace said, if she'd buy another house with one of their loans. But here was the point: She had cancer and didn't intend to buy again. She had to pay up.From Elizabeth Weintraub's Active Rain blog:
Two years later, still ill, Wallace still fumes. "It's written in my paperwork when I die to remind my kids," she said. "It says if there's a class action lawsuit, to remember me, to get my $6,000."
...
Wallace said she knew she had a prepayment penalty. "But I didn't think it would be a problem because I didn't think I would have to move," she said.
The reporter asked, among other questions, where I felt the market would move over the next year. Honestly, I see signs that we're either at or near the bottom right now. I am not predicting a fast recovery, but things are unlikely to get much worse. Our prices have fallen about as far as they are going to go.From Canadian Business Online:
Attention, real estate shoppers: the entire U.S. sunbelt is now officially on sale. Prices in many areas of Florida, Arizona, Nevada and California have dropped 40% from their peaks of a couple of years ago, to the point where the deals seem nearly too good to be true...A starter home in Sacramento, Calif., that sold for $215,000 in 2004, is on offer for a mere $129,000.
...
Are these apparent bargains really as attractive as they appear?...Many believe we’ve seen just the beginning of a monumental real estate collapse. "The size of the U.S. real estate bust on the way down will be proportional to the size of the real estate boom on the way up," says Robert Campbell, a real estate economist in San Diego, Calif., and author of Timing the Real Estate Market. "There’s no slowing down this train. The areas that had the biggest booms will have the biggest bust. Prices are heading lower — way lower."...He believes some states will bottom out in a year or two. Others, such as California and Florida, will have to wait three or four years before prices hit bottom.
From the Sacramento Bee:
The uncertainty involving market leaders created the latest set of jitters for real estate markets – including Sacramento's – that can best be described as fragile. Though year-over-year sales have risen for the first time in 36 months in the area, still more restrictions and fewer loans have the potential to curb the supply of buyers and stall a recovery, brokers said.From the Sacramento Bee:
...
Brokers said the recent boost in home sales locally is largely due to borrowers with good credit and the ability to put money down. But they said they're hearing that mortgage insurers may start requiring 10 percent down payments instead of 5 percent in so-called "declining markets" like Sacramento.
Still, [Beth] Gewerth [of Mason-McDuffie Mortgage Corp. in Sacramento] said the economic system will somehow keep the loans coming. "As we all know, housing drives the economy," she said. "They can't get too exotic. But they have to keep things going so people can purchase homes and keep it going."
Centex Homes, the Sacramento region's leading homebuilder, said Tuesday it has folded its Sacramento, Central Valley and Reno divisions into one operation based in Sacramento. That marks the second builder consolidation announced in recent days. Irvine-based John Laing Homes has folded its Bay Area and Central Valley divisions into one based in Sacramento.From the Sacramento Bee (hat tip Fred):
The chairman of Greater Sacramento Bancorp is being sued for foreclosure by two other banks. Kip Skidmore, the non-executive chairman of Greater Sacramento's board of directors, was sued by Umpqua Bank and Bank of the West over two suburban housing projects for which he guaranteed loans. Neither project involves Greater Sacramento or its operating subsidiary, Bank of Sacramento.
...
[T]he lawsuits have given him a better sense of the real estate slump and its effect on banks. "It allows me to (have) some appreciation of the situation, of what developers and banks are both going through," he said.
From Rocklin & Roseville Today:
“They don’t care and who cares about the bank” is what he said to me when I recently talked with a neighbor of a bank owned home who had helped himself to a screen door to replace the one that was broken at his house.From Bloomberg (hat tip Calculated Risk):
This kind of theft and much more is happening throughout the Sacramento real estate market on homes that have been left vacant due to foreclosure. Before the bank can take control, these home are being visited by normally honest neighbors who are carting away landscaping, fixtures and anything they can get their hands on.
...
By the way the same person who helped himself to a screen door also mows and waters the lawn of the vacant house so it won’t make the neighborhood look bad.
A U.S. Securities and Exchange Commission investigation into credit-rating companies found the firms improperly managed conflicts of interest and violated internal procedures in granting top rankings to mortgage bonds.
...
The SEC report describes an e-mail in which an analyst refers to the market for collateralized debt obligations as a "monster." "Let's hope we are all wealthy and retired by the time this house of cards falters," said the e-mail, which was sent Dec. 15, 2006, to another analyst at the same firm.
From the Stockton Record:
Stockton's credit rating was downgraded Monday by Moody's Investors Service, which said the city's shallow reserves and failure to control spending weakened its standing in a downtrodden economy...Moody's, a major Wall Street credit-rating agency, lowered Stockton's debt rating from A1 to A2, from the fifth-highest to the sixth-highest investment grade.From the Sacramento Business Journal (hat tip Melanie):
"The downgrades reflect the city's deteriorated financial position, which is not expected to improve in the near term," Moody's said in a statement. The agency said Stockton was among those cities most affected by the housing market's collapse, its foreclosure rate among the nation's highest and its new home construction at a decade low.
...
To become financially healthy will require that Stockton close the gap between revenues and expenses, [Chief Financial Officer Mark] Moses and acting Budget Officer Kathleen VonAchen said. "If we're not going to become like Vallejo, that's what we're going to have to do," Moses said.
Facing increasing losses and regulatory pressure, IndyMac Bancorp Inc. on Monday said it would close its forward mortgage business, and cut more than half of its 7,200-person work force.
...
The company had more than 130 employees in its Rancho Cordova office when it last announced job cuts in January. The letter from Perry said it would be retain 800 people at Freedom Financial, which has employees in Sacramento, Irvine and Atlanta.
From the Sacramento Bee:
For [Sacramento County Sheriff's Deputy Mark] Habecker, the weekday patrols through Natomas, Rio Linda, Del Paso Heights and North Highlands have been a front-row seat to the personal dramas behind the numbers.
Twice this year, he says, homeowners about to be evicted have committed suicide as he approached to do a lockout.
In another case, he said a fellow Sacramento deputy found a note in the home that told him where to find the foreclosed homeowner's body.
Habecker declined to say more. The cases received no publicity when they happened.
"This was our dream house. We thought this was our last move. We like the neighborhood. It's quiet," said Ria Cesante, one of the few residents. But she never counted on this kind of quiet. Hundreds of empty lots are covered with weeds. Only a few models and a cul-de-sac have been constructed. The clubhouse is well-decorated but locked up. The pool in back contains a few inches of dark brown water. Miles of shoreline sit empty.
News10
From Inman News:
The Sacramento, Calif., area topped the list for price decline with a 31.7 percent year-over-year drop in the price per square foot in April, according to the RPX Monthly Housing Market Report [pdf], which is based on values of a daily price-per-square-foot index during a 28-day period in April.From the Sacramento Bee:
In Antelope, Randy Fatius, 55, has had it. He says he's walking away from the 1,200-square-foot house he bought in October 2005. Fatius made his last payment in March. Until April, he had never missed a payment.From the Sacramento Bee:
...
Walking away is embarrassing, Fatius, a pipefitter and welder, admits. But staying is "stupid," he says..."I crunched the numbers and it floored me," he says. He figures he's lost around $200,000 in less than three years and that "it would take me 17 years to get back the value I've lost."
...
This was the first home Fatius bought. "I don't think I'll ever buy a house again," he says...He expects he can stay in it two or three more months. Afterward, he says, he'll move to the Pacific Northwest...Looking back almost three years after buying, Fatius says, "I had a gut feeling from the beginning I shouldn't have done it. I've felt it the whole time."
Downtown isn't immune to market forces. Projects opening now were mostly started during the real estate boom – and were too far along to stop when the bottom fell out. Housing has been particularly hard hit. Downtown developers say they've had to heavily discount their product to move it, and they're making little, if any, profit these days. "This is a depression in real estate; everybody who was really flying high isn't anymore," said developer Mark Friedman, who has sold 12 of his 26 Sutter Brownstones in midtown.From the Manteca Bulletin:
It is without the doubt the largest housing-related foreclosure yet in the Manteca-Lathrop market. Hundreds of lots in Beck Properties' highly-touted Oakwood Lake Shores and two sister developments in Mossdale Landing are now in the foreclosure process. It marks the first, major development to start the foreclosure process and is a clear sign that a significant up tick in home sales since March may not be enough to rescue large segments of the collapsing real estate economy.From the St. Helena Star:
No place has been more affected than San Joaquin County, said [Stan] Brody [of Burlingame-based U.S. Mortgage Corporation], where 1,600 homes have been foreclosed upon and 22,000 are in one stage or another of default. “In Stockton, which is ‘ground-zero’ for California, we closed escrow for $197,000 on a property that sold previously for $550,000,” he added.
From the Long Beach Press-Telegram:
U.S. Rep. Laura Richardson's housing woes - defaults in Long Beach and San Pedro, a foreclosure and unpaid property taxes in Sacramento - are well-documented.From the Sacramento Bee:
What is less known is that the Long Beach Democrat once held a real estate license. The congresswoman was permitted to sell property in California from Dec. 16, 1998, to Dec. 15, 2002, state Department of Real Estate records show. In the late 1990s, Richardson worked for short periods of time at Action Century 21, 3626 E. Pacific Coast Highway, and Prudential California Realty (now Coldwell Banker), 1650 Ximeno Ave., agents at both offices say.
A spokesman for Richardson says she never took part in any real estate transactions.
Sacramento-area home values have an 82.2 percent chance of being lower two years from now, an improvement from previous rankings, Walnut Creek-based PMI Mortgage Insurance Co. reported Tuesday.From the Sacramento Business Journal:
Hit hard by the housing slump and economic downturn, Sacramento furniture chain The Room Source has filed for reorganization under Chapter 11 of the U.S. Bankruptcy Code and will begin liquidating its inventory at all six locations with a court-ordered sale beginning Saturday. After several weeks, all the stores will close, according to the company conducting the sale. The retailer, which employs fewer than 200 people, began experiencing the slowdown two years ago, said Harris Blickstein, chief operating officer. People aren’t buying furniture, he said, because of fallout from the subprime mortgage bust, lower housing prices and higher gas prices.From the Sacramento Land(ing) archives:
The Room Source isn't planning layoffs or cuts, he [Blickstein] said. Instead, "I may spend more ... on advertising." The Room Source can weather a slowdown; smaller, undercapitalized businesses may not, he said...From the Modesto Bee:
An economy rocked by staggering fuel prices and a moribund housing market has claimed two more businesses -- Dan Gamel's RV Centers and RoomSource Furniture & Accessories...Gamel, who sold the company in 2005 and reacquired it early this year, said he has had trouble getting banks to lend him working capital.From the Sacramento Bee:
...
Darrel Friesen, president of the California Recreation Vehicle Dealers Association, said RV sales in the state are down 40 percent from a year ago. He said fuel prices are partly to blame, and loans are harder to get because of declining home equity and tightened lending standards.
Elk Grove Ford, arguably the automaker's anchor dealership south of Sacramento, closed down operations early Friday evening in the Elk Grove Auto Mall...Keil Enterprises also recently closed its Great Valley Chrysler-Jeep-Mazda-Isuzu dealership at 2329 Fulton Ave. in Sacramento...[L]ocal auto dealer Paul Blanco announced in April that he was going to close Paul Blanco Chevrolet at 3815 Florin Road...Michael Barbieri, owner and manager of Auburn Nissan, said financial difficulties led to the closing of his dealership in Auburn on April 24.From the Lodi News Sentinel:
...
"This is the reality of the harshness of the market right now," [Rick Niello, president of the Sacramento-based Niello Co]...said... "…It's like seeing a home in your neighborhood where your neighbors have left and the weeds are growing all around the place."
Plans to build Lodi's new drinking water treatment plant will not flow as fast as first thought, city leaders said Tuesday. That is because the $41 million plant's funding source — fees from new development — has largely dried up.From the CVBT:
[F]or many of the first settlers, Mountain House has become a nightmare. Out of about 300 homes on the resale market in the community rising out of 4,800 acres of former ranches and farms near Tracy in the Central Valley, roughly 260 are in some state of foreclosure, according to the real estate website trulia.com.From the Modesto Bee:
Consider it a consolation prize: Plummeting home values have cost Northern San Joaquin Valley homeowners billions in home equity, but at least their property taxes are going down..."The average assessment value decrease was $122,000, which was a shock to us," Stanislaus County Assessor Doug Harms said Monday.From the Modesto Bee:
...
The widespread decline in property assessments is unprecedented, causing total assessment rolls in the three counties to decline for the first time -- or at least as far back as records go.
Hundreds of homeowners in Modesto and Patterson are late paying special property taxes, forcing the cities to begin a speedy foreclosure process for houses in newer subdivisions. The cities went through the same procedures last year when clusters of homeowners didn't pay Mello-Roos taxes they owe for growth-related effects such as roads and parks.
...
More than a fifth of what Patterson residents owe in Mello-Roos charges hasn't been paid, City Manager Cleve Morris said. That has cost the city about $1 million this year.
